CamelCase is easy with a regex and you don't need to
parse it. It completely avoids problems like how to handle
[[[a link] with some more text and [[something else]]
Getting into parsing means more complex code and with that complexity comes for the possibility of bugs.
This was also at the time of the Cambrian explosion of Web 2.0 and user content. Lots of different sites took different approaches to handling it. The CamelCase link approach reads kind of clunky but is likely elegantly simple in implementation.
C2 was from the very early days and something that works, well, it works. Going to a full on sanitizer and larger set of allowed html leads forever chasing bugs and implementing features.
Compare also HN and the rather limited feature set. It is better to have something that works and move on rather than forever implementing features (often with backwards compatibility breaking cases).